7 Reasons Why Malaysia is a Top Choice for Japanese MNCs Relocating from Singapore

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As global economic dynamics shift, Malaysia is positioning itself as a premier destination for multinational corporations (MNCs) seeking alternatives to Singapore’s escalating operational costs. Economists are taking note of Malaysia’s strategic efforts to attract these corporations, particularly from Japan, as they diversify their regional headquarters locations in response to Singapore’s rising expenses.

Sunway University’s Professor Yeah Kim Leng highlights Malaysia’s comprehensive development in physical, financial, and logistics infrastructure, which complements its harmonious industrial relations and multilingual workforce. These factors are making Malaysia increasingly visible to foreign investors scouting for opportunities within the vibrant ASEAN and broader Asian markets.

To enhance its appeal, Malaysia is working on streamlining government processes and sharpening policies that facilitate trade and investment. This strategic focus is designed to position Malaysia as the next best alternative for businesses facing growth limitations and rising costs in Singapore.


Professor Yeah also points out the potential benefits for local firms and suppliers to integrate into global value chains initiated by these MNCs. Improving the quality, reliability, and cost-efficiency of domestic products and services is essential. Such enhancements will not only attract more MNCs but will also strengthen Malaysia’s status as a global hub for services and manufacturing through a positive “crowding in” effect on local supply chains.

Economist Geoffrey Williams mentions that, while Malaysia shares many advantages with Singapore, such as the prevalence of English, high-quality workforce, and regional connectivity, it excels in cost-effectiveness. This edge is critical when compared to other regional players like Indonesia and Vietnam, which, despite their larger markets, are just beginning to attract direct MNC investments.

Williams emphasizes that the conversion of investment approvals into actual investments is crucial. Reducing bureaucratic red tape, speeding up work permit issuances, and providing easier access to financial services are necessary steps to foster a more welcoming, low-tax, and agile business environment.

Dr. Shankaran Nambiar of the Malaysian Institute of Economic Research suggests that further improvements in infrastructure are needed, along with reductions in bureaucratic processes. He also highlights the importance of aligning the functions of central and state agencies more closely, and the need to develop talent and research and development (R&D) capacities to attract foreign direct investment (FDI) effectively.

Recent trends indicate a shift in preferences among Japanese firms, with a noticeable number considering relocating from Singapore due to cost pressures. For instance, Sakata Inx, a leading printing ink company, chose Malaysia over Singapore for its regional headquarters, drawn by favorable tax incentives.

The Japanese External Trade Organisation’s poll reveals an increasing openness among Japanese companies to relocate their regional headquarters from Singapore, with the 2023 European Chamber of Commerce survey in Singapore supporting this trend due to operational cost concerns.

The Malaysian Investment Development Authority (Mida) and InvestKL have reported historic highs in FDI for 2023, demonstrating Malaysia’s growing appeal across various sectors including technology, healthcare, and finance. These investments are not only high in value but have also significantly contributed to job creation in the executive sector.

With such comprehensive advantages and strategic initiatives, Malaysia is well on its way to becoming a top choice for MNCs looking to optimize their presence in Southeast Asia. The nation’s proactive approach in refining its offerings and aligning them with global business needs marks a promising path towards becoming a leading economic hub in the region.

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